Citywire Top 1000 manager de Fonclare remains underweight banks across all of his funds but Swiss bank UBS is now his largest holding, after he started buying three months ago.

It makes up 3.3% of his European Opportunities fund, and he decided to buy into the bank after it made changes to its business model to reduce systemic risks.

The new position was partly financed after de Fonclare sold a near 2% stake in oil services stock Fugro on corporate governance concerns when the group suddenly fired its chief executive and changed business strategy.

Overall, faced with the long term low growth environment and ongoing concerns over sovereign debt and a potential eurozone break-up, de Fonclare is continuing to avoid peripheral Europe and concentrate on Europe's strongest economies, with overweight positions in Switzerland, Germany and the Nordic region.

'I am a pure stock picker but you have to take the macro picture into account so a common theme is to steer clear of political issues in Europe while capturing international growth. This has been how I have positioned my funds for the past two years and I don't see the political risks decreasing.'

Banking and telco concerns

De Fonclare has particular concerns over risks to the banking and telecoms sectors and is looking for stocks that go 'under the radar' of politicians looking to raise tax take to help struggling economies.

'We don't have any eurozone banks and favour private banks over retail banks because [retail banks] have too much exposure to Greek and Italian debt. Retail banking in France will be very dull for many years and these are the most volatile stocks.'

He is keeping a diversified portfolio of stocks which he believes can generate growth above GDP, with low volatility and strong balance sheets.

De Fonclare's focus on stocks which can access relatively stronger emerging market growth is crucial and he cites tyre maker Nokian as a key holding.

'Nokian has major exposure to the Russian market and has a huge winter tyre business. It is very hard to import such products from China so access to its local market is crucial. It has a combination of the right brand and the right strategy to generate strong growth over a long time and it also has virtually no debt.'

'And because they are a niche player, they can grow in other parts of the world too.'

Portfolio additions

He has been adding to airport retail operator Dufry on market weakness, after the company was able to take advantage of depressed prices to acquire several duty free shops in Greece, where despite the well documented troubles, tourism remains relatively buoyant.

'Because they are number one in this market they are getting a significant opportunity to benefit from duty free and duty paid at airports.'

Specialist mid-cap chemicals firm AZ Chemicals was a recent addition to the portfolio as de Fonclare looks to cash in on demand for its chemicals which are used to treat screens on iPads and other flat screen devices.

'It is UK -listed but 80% of its operations are in Asia. It does specialist applications for semi conductors and iPads and requires very low capex. It is benefiting from volume rather than price growth. It has a very good track record of growth but is trading at a discount to others in the sector such as Croda.'

De Fonclare has also been taking money out of selective defensive growth stocks which he believed were looking fully valued after strong runs.

While he admits this has cost him some performance this year as many have continued to rally, his slightly contrarian stance has led him to recycle some of the proceeds into areas and stocks which have lagged the general market recovery.

'We are now quite cautious on these momentum stocks as many of the quality defensive growth businesses have done extremely well and are trading at the top of historic valuations.'

This has led de Fonclare to reduce exposure to food and beverage stocks in particular as he does not believe they will be able to pass on many more price rises to financially squeezed consumers.

Over five years to the end of November, the Jupiter European Opportunities fund as returned 1.3% compared to the FTSE World Europe loss of -10.9%.

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